Question

8. The following hammers were available for sale during the year for Wilkins Tools: Beginning inventory.............. First purchase.......... Second purchase........ Third purchase............. 10 units at $40 15 units at $55 30 units at $70 25 units at $65 Wilkins has 30 hammers on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method? A) $1,975 B) $2,975 C) $1,575 D) $1,950

Answer 1

FIFO method: In this method those goods are sold first which are purchased first and the ending inventory is from recent purchases
Dollar amount of inventory at the end of the year = ( 25 units * $65 ) + ( 5 units * $70 )	$                     1,975	Option A)